There are things about independent advisors that I truly admire. Their sense of entrepreneurship, dedication to their clients, and understanding the meaning and implications of being a fiduciary just to name a few are second to none. And as business models in the financial services continuously change (I referenced this in my first article in this series), so must an independent advisor take a look at their business AS a business. Keeping up with new trends is crucial to long-term success.

Developing a set of key performance metrics is a good way to start especially when it comes to the acquisition of new clients. The one thing that a lot of transitioning advisors and even legacy independent advisors have trouble with is developing a cohesive marketing strategy that doesn’t just get their names out in public, it has to generate lead flow.  

No leads=no growth and no maintenance of a long-term stable client base, not to mention long term growth in personal income. 

Let’s look at some of the methods advisors use to generate new clients and how they should measure relative success or failure of those methods.

One has to be able to measure the return on each lead generation channel to see if they are working. If you can’t measure it, you can’t manage it. Most KPI’s center on cost per lead, cost per appointment to cost per asset depending on what you want to measure. They both equate to a return on investment and the idea is to find the lowest cost for both.  A large volume of leads, if inexpensive, can be very effective in creating a solid ROI. And by extension, since most advisors get paid based on assets under management, assessing the cost per asset gives an advisor a very good idea of how long it will take to recoup that investment from revenue created. 

Obviously, the shorter the time, the better.  So, let’s take a look at some different lead channels and what one can expect:

Radio shows.  

By far the most effective medium to generate lead flow over time is a radio show. 

In my experience, close rates on leads generated from this medium are between 35%-50% depending on how long the show has been running.  However, the cost is very restrictive for most small independent RIA advisors. And the cost varies greatly depending on geography.  For instance, running a one-hour radio show on Saturday mornings in Springfield Missouri runs about $50,000 per year.  The same show running in Chicago, or Southern Florida where I live will run upwards of $250,000 per year.  That’s a lot of money to cover. If you are netting, let’s say 60% of revenue in Chicago, you will need to bring in just under 42 million dollars in AUM to pay for the radio show.  Anyone who knows how long it takes to bring in 42 million will not find this channel appealing despite the high close rate.

Seminars and Dinners

The pros to seminars and dinner event strategy is the face-to-face dynamic between the advisor and prospects. 

In my experience, large seminar productions are somewhat costly and the bigger the audience, the less intimate the experience will be in acquiring qualified prospects. Couple that with those that just want to eat the food you are paying for and the return is usually small.  If you can fill a room with 50 people at a hotel with food, expect to spend a few thousand dollars on it and a lot of prep time and marketing collateral to go along with the presentation.  When it comes to the number of appointments set at those kinds of events, depending on the topic, you should expect around 20 percent of the audience committing to meeting with you. However, even with appointment reminder calls and emails, only half will show up and only 1 percent will become clients. Doing the math, it’s a lot of time, money and energy to get a client.  That’s not to say that some advisors have success with this strategy, but again in my experience, it’s best to find a better way to reach a larger audience for the same cost. 

Client Referrals

One of the best lead generation channels that requires the least amount of effort and is virtually cost-free.  

Ironically, many advisors fail to ask for them and if they do, they ask at the wrong time and in the wrong way. And it takes a lot of practice and repetition to become proficient in asking your clients for a referral.  So, when is the best time to ask for referrals? A lot of financial advisors think when they feel they’ve cemented a solid relationship with the client or when the market is doing well. That’s a mistake. The best time to ask and begin the process with your clients are when they have just signed on with you. At that moment, they are the most satisfied with this new relationship.  They’ve come to trust you, believe in your abilities to get them where they want to go and are relieved that a life decision has been finally made. The way you ask is just as important.

Make it about them, not you. 

Thank them for becoming a client and ‘oh by the way, if you have any friends or relatives that could use the help I provide, I give you my word that I will treat them with the same care that I have and will treat you’.  People love to help people they care about. And it works.  But you have to be consistent and the asking has to roll off your tongue in a very natural way.  Conversion on referrals is at least 75% or better.  You’ve been endorsed by a client-testimonials are powerful.

Digital Lead Generation

If you are looking for high volume lead flow, digital advertising and social media is the way to go.

 Available to almost any budget and targeted to the demographic you wish to serve; this channel is virtually work-free.  Technology does the heavy lifting and if you understand the concepts of digital keyword search, search engine optimization, branded and non-branded ads, you will understand how expeditious this channel is.  If you don’t know much about it, let me know.  I am familiar with a few companies that do this on a huge scale along with other aspects of marketing that are integrated into a holistic digital client and prospect experience.

I hope this little review was helpful in your understanding of the importance and different types of marketing available to financial advisors.  You are bound to lose clients each year and you will need to refill that bucket to keep your business going. Each of these strategies work to some degree or another.  The question that you need to answer is how much time and energy (and money) do you want to spend on prospecting versus taking care of your current clients while running other aspects of your business.  

As always, feel free to shoot me a message or email if you have any questions that I can answer for you. And if you have one that would be a good one to explore, I’ll share it in an upcoming article.


David Roberson

CEO and Founder

Over fourteen years in technology, marketing, and branding for Financial Services.